<If we're gonna be talking about all the things I didn't see, this isn't gonna be a very pleasant experience for me ;)>
Well, if you were always right, we couldn't live with it. None of us are, but what I was trying to say was, maybe you see the negative more strongly than the positive. I returned from Diskcon and tried to bring Hutch to everyone's attention as a opportunity. The problems you mentioned were there, but clearly something had changed.
You have great skills and I value your contributions a lot, but they are so often negative that it would seem there is never a good reason to buy when in fact we often see events like the last quarter were great opportunity and in general we (the thread in general) didn't pound the tables because we are so aware of the negative.
<The market seems to think that the HD market is on the mend, but I beg to differ. Nobody of any significant size has yet to be taken out. Stormedia doesn't count. Gloom and doom Larry is still looking for the complete wipeout of the American media suppliers Komag and HMT, AMC bankruptcy (not that anyone would notice or care), Read-Rite losing its independence or diluting massively, WDC existing as nothing more than IBM's MKE.>
This is interesting because I believe many people buying stocks believe RDRT and APM are the only suppliers of heads for example. I believe the market in general is so poorly informed, the level of information we exchange puts us at disadvantage.
At the same time, the information in this thread is very well known to the industry. I was sent a copy of Data Storage Review, a very comprehensive report on the Data Storage industry, and it had a direct quote from you. No, there is no problem with the quality of your advice, it's just that it misses the emotion that seems to drive the market.
<Hutch has real issues financing its aggressive TSA expansion. It remains to be seen whether this huge, naked bet will pay off, although I wouldn't be buying Innovex right about now. All I know is that their cost of capital isn't exactly low.>
Hutch has a huge bet, but then they are like the gambling debts of Bill Gate's son. The bookmaker knows he won't have to break legs to get paid. Well, we know that Hutchinson is too important to the industry for them to go out of business.
TSA is an enabling technology as are high precision suspensions. I believe many next generation drives are reacting a point where they won't proceed without TSA. Fujitsu has a similar technology called CAPS which has also proven itself, but they haven't shared this technology and it's been an in house costly design until now. Who knows what struggles they would have if they were making this product on an independent basis like Hutch.
<Huh? Seagate is a customer.>
Here I am talking about TSA. Yes, Seagate is a big customer HTI for suspensions, even specialty suspensions designed to support Innovex's HIF, a flex circuit that competes with TSA. What I meant to say was Seagate has choosen a path of buying the flex circuit and bonding it to the suspension in house vs TSA. They also buy flex circuits from 3M. For a customer to assume the job of bonding, they must take on a much greater job and assume costs that are already included in TSA. You could say Innovex is the one who has made the big miss being so late developing a prebonded suspension because this is clearly what the market wants. Seagate is the only company who has been willing to take this job for whatever reason.
<Au contraire! These stocks are like our fair President. They have become more dear while their prospects have dimmed. I call this a stealth multiple expansion. >
Yes, multiples. How do you calculate multiples on losses? How do you calculate multiples on sales when the market is in over capacity and products are more or less trading as commodities? How do you generally bring logic to any of this? Yet we know that most of these companies are not going to zero and they are by rights over valued.
Wisdom would say either readjust your thinking to the illogic of the people buying these stocks, or move on to another sector. Judging by the drop in posts, I think many people have moved on. I have. I mostly follow the group as a hobby. From time to time, I'll see an event and trade it. I still hold Read Rite, but think it may be getting time to take a profit. Otherwise, I've sold all HDD stocks.
I would also be worried buying Intel at these levels and the S&P in general. But if I was so smart... To quote a wise man, "If we're gonna be talking about all the things I didn't see, this isn't gonna be a very pleasant experience for me ;)".
Regards,
Mark |
